Two-thirds of UK manufacturers report that Brexit has hampered their business, and more than half fear further impact this year, according to new research out today.

The survey, published by manufacturers’ organisation Make UK and business group PwC, revealed that Britain’s manufacturers are more positive about the growth outlook as they enter 2022.

However, this optimism is tempered by concern about the impact of Brexit, especially after the introduction of tighter custom controls between Britain and the EU on 1 January 2022.

Two-thirds of companies taking part in the survey in the autumn said that leaving the EU had already “moderately or significantly hampered” their business, and 56% feared a further impact this year from customs delays due to import checks and changes in product labelling.

Their optimism is also tempered by escalating inflationary pressures and access to, as well as retaining, talent and key skills which, according to the report’s authors, are by far the biggest issues companies are having to address.

Nearly three-quarters (73%) believed that, overall, conditions for the sector would improve in 2022, with 73% also believing the opportunities for their business outweighed the risks.

To date, the sector appears to have seen little or no disruption from the Covid-19 Omicron variant to alter this confidence.

Almost two-thirds (63%) of companies felt the UK to be a competitive location for manufacturing while only 13% believed it to be an uncompetitive place to do business.

The report’s authors found that, to take advantage of these opportunities, manufacturers are prioritising improving productivity, investment in their people as well as new product development, while the recent COP 26 summit appears to have accelerated investments in the drive to “net zero”.

Make UK chief executive Stephen Phipson said: “It’s testament to the strength of manufacturers that they have emerged from the turbulence of the last couple of years in such a relatively strong position.

“While clouds remain on the horizon in the form of rapidly escalating costs and access to key skills, the outlook is more positive for those that remain adaptable, agile and innovative.

“To build on this we now need to see a Government fully committed to supporting the sector at home and overseas. This requires more than a ‘Plan for Growth’ but a broader industrial strategy that sets out a long-term vision for the economy and how we are going to achieve consistent economic growth across the whole country.”

Cara Haffey, PwC’s UK industrial manufacturing and automotive leader, added: “Despite facing an unprecedented combination of continued Covid pressures, cost inflation and supply chain issues, our manufacturers are responding with an impressive amount of agility and resilience, which will stand them in good stead for the year ahead.

“They have learned valuable lessons about their supply chain vulnerabilities and the resilience needed to respond to unforeseen international or domestic risks, and are strengthening their businesses digitally as well as continuing to focus on talent and skills.

“We are particularly pleased by the breadth of net zero ambitions reflected in the report. Across the UK we’re seeing an increasing number of businesses underpin their environmental, social and governance strategies with practical applications to decarbonise their operations and ambitions to build out their green skill base through the recruitment of ‘green’ jobs, a move that has already been flagged as outperforming the UK sector average in our recent Green Jobs Barometer.”